But there's one more beginner's mistake many people saving for retirement make: They never invest what they save. Or they sell their investments and opt for cash the minute there's a negative newsflash.

Take the first woman in this article, for instance, who has $75,000 sitting in a savings account — she's paralyzed because she's not sure what to do with the money.

Or take Craig Wolfe, 61, who waited for the stock market to rebound after the downturn in 2008 and then sold all his stocks for cash. "Even over the years, with the market coming back, I never looked back," says Wolfe, who is the president of CelebriDucks, a company that makes rubber duck collectibles. "I know it's odd to keep so much money in cash and liquid CDs, but I can sleep at night."

More than 25 percent of Americans stash their long-term savings in cash instead of investing it, according to a Bankrate study. At a time when the average money market account earns just 0.12 percent, that's a lot of money to leave on the table.

Why all-cash may not be good for you

There are good reasons to leave some of your savings liquid. For instance, many in the financial services industry suggest having at least six months of living expenses in an accessible savings account in case of emergency. (And you have that covered, right?) As for the rest? It can be smarter to invest it.

Why? Because if you don't, in a sense you're actually losing money every year. "The cost of goods and services goes up every year by about three percent on average, as inflation," says David Blaylock, a LearnVest certified financial planner™ in Fort Worth, Texas. "If you're earning one percent on your money in a savings account, you're arguably losing purchasing power every year due to inflation. Growth isn't even a possibility." In other words, the longer you stay in cash, the more your nest egg may shrink, relative to what it can buy you.

This is especially true now, when interest rates are at such a low point. There was a time — not so long ago — when you could earn three percent to four percent in a savings account, but that is no longer the case. "We're at historically low rates," Blaylock says. "You're not going to outpace inflation right now."

If you've gotten to cash the other way — invested first, then pulled your money at the first sign of trouble — you're basically trying to time the market. "It can be seen as the equivalent of gambling," Blaylock says. "Only time will tell whether it was a good decision or a bad decision. Unfortunately, by that time, it's too late to take any corrective action."

If you invest your savings, on the other hand, there's the potential to beat inflation and earn more money for retirement. (And those rounds of golf you'll be playing.) Compound interest is a powerful thing. Consider the idea that if you were to invest just $2,000 a year from ages 25 to 65, earning eight percent a year, you'd have more than half a million dollars in the bank. Save 10 percent to 15 percent of your salary, and you'll have exponentially more.

Just because you may not have all of your savings in cash doesn't necessarily mean that you should have all of it in stock. Your investments — stocks and bonds, for instance — should reflect the amount of time you have until retirement and your tolerance for risk. A typical investing rule of thumb is that the percentage of your assets invested in stocks should be 120 minus your age. To put it another way, if you don't need to tap that money for several decades, you may be able to take more risk with it — as long as you have the stomach for the occasional dip in your balance.

What you do with the stock portion of your portfolio depends on where your money is — your employer's 401(k), an IRA at a brokerage house — and what your investment choices are. "If I'm at Fidelity, I've got a different set of choices than I would have if my investment is at Charles Schwab," Blaylock says. In general, it could be a good idea to use index funds — which are funds that try to mimic a major index, such as the S&P 500. And look for funds with the lowest expense ratio, which is the percentage of the fund's assets that go to expenses. The higher the expenses charged, the lower your earnings.

After that, it's all about diversifying — or making sure that your money isn't all in one place. (You know what they say about where you put all your eggs, right?) "In a well diversified portfolio, you're going to want large companies, small companies, developed international companies and emerging markets, which include companies in newer economies like Brazil, Latin America, India and China," Blaylock says. (You will typically find large companies referred to as "large-cap" and small companies as "small-cap.")

After that, it's about letting your investments do their thing. You may not want to do a lot of trading in and out of funds, since transaction costs will help whittle away your bottom line. And don't panic if you see a loss here and there — you should have years before you need to use that money for anything, in which time it very well may rebound.

If you have a lot of money in cash right now, it may not be a good idea to throw it all back into the market at once. "We don't want to go in and buy $100,000 worth of securities in one day," Blaylock says. "What if that's an up day? We usually want to buy over time." Depending on how much money you have on hand, you might consider investing 10 percent of your portfolio every month. "We want to tiptoe out of cash back into the market," Blaylock says. "That way, you're helping to avoid any big volatility inside of the market, and averaging the price you pay over time."